Directors and officers liability insurance

Directors and officers (D&O) liability insurance is a type of insurance that protects individuals from claims made against them in their roles as officers of an organization. For example, the policy would cover any judgments incurred from lawsuits related to breach of fiduciary duty, misuse of company funds, and lack of corporate governance. In addition, D&O insurance typically covers the cost of defending against lawsuits that are targeted at the directors and officers of a business, though defense costs reduce the policy’s limits. It is especially useful to have this insurance when a business is publicly-held, since there is an increased risk of shareholder lawsuits. A prudent individual will not accept a board director position unless a firm already has D&O insurance in place. D&O insurance is written on a claims-made basis.

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